In its announcement, MSCI said that certain issues are still holding China back from approval, including the ability to buy and sell stocks freely and ambiguous uncertain legal rights in regard to stock ownership.

Many experts believe that China needs to continue with liberalizing economic reforms if it wishes to be added to MSCI’s indexes and that the recent rejection could help hasten the process. “The issue is not whether A-shares will get into [the MSCI indexes]; the question is more about when,” Chin Ping Chia, head of research for the Asia-Pacific region at MSCI, said in the Wall Street Journal.

Yuan-denominated stocks, if added, would make up less than 1% of the MSCI benchmark in the first stage. A full inclusion, which is subject to China’s continued liberalization of trading restrictions, would boost China’s weighting to 38%, according to MSCI.

Minsheng Securities Co. analysts estimate US$7.8 billion would flow into A-shares based on limited inclusion and US$154.5 billion based on full inclusion, according to Bloomberg Business.

China’s stock markets are not included in most world stock market indexes. However, last month, index provider FTSE said it would add Chinese stocks in two new emerging-market indexes.

According to Reuters, the new FTSE emerging-markets indexes “will have an initial weighting of 5% for China A-shares. That will rise to 32% when the shares become fully available to international investors.” Including Chinese shares listed in Hong Kong, Chinese shares would make up 50% of its emerging-markets index, according to FTSE.

Prior to MSCI’s rejection of China, Chinese stocks rallied to a seven-year high on hopes of being added. Markets responded to the disappointing news with modest losses, which also were due in part to China’s central bank adjusting its 2015 growth forecast down to 7% from 7.1%.